Oil scales $115/bl on US data

Oil prices set a record above $115 a barrel on Thursday as a fall in US gasoline inventories raised supply shortage concerns ahead of the summer driving season.

US crude set a new high of $115.45 a barrel and by 0830 GMT was trading at $115.08, up 15 cents. Oil has struck new peaks for three consecutive days. London Brent set a record $113.29, up 63 cents.

Prices gained $1.14 on Wednesday, taking this year's gains to nearly 20 per cent, as US government data showed drops in gasoline and crude inventories against analysts expectations for increases.

"Summer driving season is approaching. And even in a recessionary economy, seasonal gasoline demand will pick up, which adds to stress on the global oil supply chain," Jan Stuart, economist with UBS, said .

"But before we get there, the stress already put onto the supply chain globally by middle distillate demand and supply dynamics is not still abating."

London's ICE gas oil futures rose 1.41 per cent, leading the oil complex on Thursday. China's top refiners were set to extend unusually high imports of distillates, such as diesel and gas oil, into a sixth-straight month. PetroChina, China's second largest refiner, has bought 300,000 tonnes of gas oil for May, traders said.

"The market was already in a bullish frame of mind prior the data partly buoyed by further confirmation that China continues it's lust for oil," MF Global said.

The weakness of the dollar continued to attract investors into oil and commodities to hedge against inflation and bet oil's five year rally would help compensate for shrinking values of dollar assets in their portfolio amid a slowing US economy. The dollar fell to an all-time low against euro on Wednesday.

Crude basket at fresh high
The basket of crude oil that Indian refiners buy touched a new high of $107.14 per barrel on Wednesday, the latest day for which data is available.

The price of the basket reflects the record prices of oil in global markets which are rising as the value of the dollar against major currencies continue to dip and there continues to be fears of oil supply disruptions from Mexico.

The price of India's crude oil basket, which comprises of Oman-Dubai sour (high sulphur) grade crude oil and Brent dated sweet (low sulphur) crude oil in a 61.4:38.6 ratio, has averaged $102.15 a barrel so far this month as against $99.76 per barrel in March and $92.37 per barrel in February.

The high oil prices have resulted in the country's oil marketing companies losing over Rs 77,300 crore in 2007-08 as they sell petrol, diesel, LPG and kerosene at subsidised prices. At current crude oil prices, the revenue loss of these companies is expected to go up to around Rs 150,000 crore in 2008-09.